Export Promotion Rationale Continued – Final Part

Here are my conclusions about the seven dimensions that should guide export
assistance efforts, in particular where new and growing businesses are
concerned. One needs to determine what export assistance is to achieve. Some of the current objectives are global fairness and the opening of world markets. Public funds and government attention are too scarce to invest solely to right wrongs or for the
sake of fairness. The key focus must be on the benefits to U.S. employment. The
time frame involved should be a long-term orientation, which concentrates efforts on introducing more and new firms to the global market. Export assistance needs to achieve either a specific reduction of risk or an increase in profits for firms. It should be concentrated primarily in those areas where profit and risk inconsistencies produce market gaps, and be linked directly to identifiable organizational or managerial characteristics that need improvement. Otherwise, assistance supports only exports that would have taken place anyway. The measurement of success should be based on the export involvement of the firm, focusing on the number of customers, transactions, and locations served. Coordination is crucial. Within government, one must avoid that well established industry sectors with relatively low employment effects consume resources in an over proportionate fashion while priority growth industries would be left to seek export success on their own with insufficient support. Externally, export assistance must ensure that the policy gains abroad are actually used by domestic firms. Rather than concentrate only on well entrenched industries, the focus
must be on sunrise industries. Export assistance should emphasize those areas where government can bring a particular strength to bear-such as contacts or prowess in opening doors abroad, or information collection capabilities. Externally, programs should aim at the large opportunities abroad. As far as firms are concerned, attention should not assist industries in trouble, but mainly help successful firms do better.

Export assistance programs should start out by analyzing the current level of international involvement of the firm and then deliver assistance appropriate to the firm’s needs. For example, help with after-sales service delivery is most appropriate for firms at the adaptation stage; firms at the awareness stage worry much more about information and mechanics. Assistance must also take foreign market conditions and foreign buyer preferences into account. It is easier to sell what is in demand rather than being guided by what’s in ample supply.

There should be a spark of boldness which goes beyond ensuring that things are done
right, but checks whether one can do more right things. One could, for example, think about domestic and international efforts to set standards for technology and quality, and include the grading of enzymes, meats, hormones, and other products developed by biotechnology firms. Or one could think about the development of a national forfeiting institution and the delivery of training to banks,  to be of major assistance in handling the financial and documentation aspects of exporting. In a world of shifting goal posts and rapidly changing realities, all firms should be prepared for the global marketplace. If they can grow and successfully meet international competition, they will strengthen themselves and the nation.

The Rationale for Export Promotion : Part 1

Exports are important. Yet, why should firms be enticed into exporting through the use
of public funds? Profit opportunities for exporters should be enough of an
incentive for firms to export. To explore this issue, I will use our Georgetown University research, which was  initially published in the AMA  Journal of  International Marketing.  First off, it is helpful to understand the export process within the firm. Typically, firms evolve along different stages to become experienced exporters. They start out being uninterested in things international. Management frequently will not even fill an unsolicited export order. Should  international market stimuli continue over time, however, a firm may move to the stage of export awareness, or even export interest. Management will begin to accumulate information about international markets and may consider the feasibility of exporting. At the export trial stage, the firm will fill selected export orders, serve a few customers, and expand into countries that are geographically close or culturally similar to the home country. At the export
evaluation stage, firms consider the impact of exporting on overall corporate
activities. Unless initial expectations are met, the firm is likely to discontinue its export efforts, seek alternative international growth opportunities or restrict itself to the domestic market. Success will lead the firm over time, to become an export adapter, make frequent shipments to many customers in more countries, and incorporate international considerations into its planning.

By: Michael R. Czinkota